Snow: US tax cuts would ensure growth for yearshttp://www.forbes.com/markets/newswire/2004/03/08/rtr1290262.htmlWASHINGTON, March 8 (Reuters) - U.S. Treasury Secretary John Snow on Monday stumped for the continuation of White House-backed tax cuts set to expire by the end of the decade, saying they would ensure growth well into the future.
"The cuts have been the lynch pin in the improving performance of the economy, and making those tax cuts permanent is the surest thing we can do to sustain the economy on a good, strong growth path for this year and the years beyond," Snow said in prepared remarks before a gathering of U.S. state treasurers here.
"I am confident that if we do that, we are going to continue to have above-normal growth for the American economy for a good stretch of years ahead of us," he said.
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"I am confident that we will see good jobs pick up in the months ahead, as indicated by all the private-sector surveys which indicate strong jobs growth over the course of the next year," he said.
Snow says intervention no way to strong currencyhttp://www.reuters.com/financeNewsArticle.jhtml?type=economicNews&storyID=4521513WASHINGTON, March 8 (Reuters) - U.S. Treasury Secretary John Snow said on Monday that China definitely was moving toward a floating currency exchange rate and warned that no country could maintain a strong currency through market interventions.
Speaking to a state treasurers' group, Snow repeated that the United States backs a strong dollar and believes that governments should intervene in currency markets as little as possible to affect values.
"We favor a strong dollar but the relative value of currencies is best set through open, competitive currency markets," Snow said in response to a question. "No currency can really be regarded as strong if it depends on life support, if it's being propped up by intervention."
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"We're strong advocates of flexibility -- open, competitive currency markets -- and we think it's the best regime for currencies," Snow said. "That's the message we've taken to the Chinese ... urging them to move off the peg, get rid of the peg, let greater flexibility apply and eventually move to a float."
Snow said China has "embraced the idea that they want to go to fluctuating rates," but acknowledged it will take some time to do so, since China's financial system must be braced up.
On domestic issues, Snow said the U.S. economy currently enjoyed "unusually solid" fundamentals, including lofty rates of new-home ownership and low interest rates. But he said the dearth of new jobs -- only 21,000 jobs were created in February -- was "a mystery," though he still expected a pickup in coming months.
One factor he cited was the lingering bad taste in investors' mouths from corporate scandals in the 1990s and afterward including misleading balance sheets and lying by chief executives.
China to keep yuan policy for "long time"BEIJING (Reuters) - China's fixed currency policy will be around for "a long time to come" and speculators that bet on a yuan appreciation will end up paying a heavy price, the country's foreign exchange chief said.
In a strongly worded defence of the yuan's long-standing peg to the dollar, Guo Shuqing, head of the State Administration of Foreign Exchange, said economic conditions that have encouraged speculators eyeing a yuan appreciation were more likely to turn around and burn them before the government made any change to its exchange rate policy.
"Betting on a renminbi (yuan) appreciation is likely to (end up costing) an enormous price," the Xinhua news agency on Monday quoted Guo as saying. The warning was directed at Chinese companies and residents, the agency said.
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"China's managed floating exchange rate system conforms to the realities of China and it will continue for a long time to come," Guo was quoted as saying.
Over the past few days, at the annual session of the National People's Congress, Guo has emerged as a de facto spokesman on the currency, making a string of statements defending the peg while holding out the prospect of gradual reform.
China has no plan to revalue yuan soonhttp://www.chinadaily.com.cn/english/doc/2004-03/08/content_312672.htmDeputy governor Li Ruogu of the People's Bank of China, the central bank, said on Sunday China has no plan to revalue the yuan in the near future and believes the pegged currency is correctly valued.
Speaking on the sidelines of a bimonthly meeting of central bank governors from the G10 industrialized nations and major emerging markets, Li also said China will closely monitor inflation although the domestic economy is not overheating.
Asked by reporters whether there was an imminent plan to revalue the yuan, Li said: "No ... I don't think there is pressure."
Asked if he thought the yuan was correctly valued now, he replied "Certainly I do."
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As part of financial sector reform, China has been pushing the "Big Four" state banks to whip operations and assets into shape before global banks gain near unfettered access to the Chinese market by late 2006 in line with World Trade Organization commitments.
On China's reform progress, Li said: "It could be a very long process, or short process, depending on all the preparations for the reform and how good work we can do for the next couple of years. (The reform progress is) so far so well."
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